Leadership and the company's willingness to take risks: Empirical analysis in Vietnam

Abstract

This research analyzes the nexus between the leader and the company's willingness to take risks in the case of Vietnamese companies. Corporate governance procedures rely heavily on the leader to carry out the company's most important objectives and maximize returns to shareholders. However, leadership does not always conform to scholarly expectations. Consequently, non-financial firms listed on Vietnam's stock market from 2010 to 2020 are analyzed to determine the association between leadership and the extent of willingness to take risks. Using the SYS-GMM method to control for endogenous confounds, this investigation reveals that there is an inverted U-shaped relationship between leader authority and the extent of willingness to take risks. In particular, a willingness to take risks in pursuit of more profits increases as the leader's level of authority decreases. However, companies become less risk-taking as their leader's authority grows. Consequently, the study's key contributions are implications for setting up governance and oversight systems, particularly leader power, to maximize stakeholder interests.